TRANSCRIPT
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#28 - Medicare Explained: How to Choose the Right Plan for You
Introduction
Eric Blake: Welcome to another episode of the Simply Retirement Podcast where we simply focus on retirement planning so you can focus on retirement living. I'm your host, Eric Blake.
On this show we go beyond just the financial aspects of retirement but also many of the non-financial aspects of retirement planning that many women will face on their retirement journey which can often be just as important if not more important to you living a successful retirement.
But today, we have one of those topics that, as relatively straightforward as it is or, let's say, as it should be, still creates a ton of confusion and stress on retirees, and that is the topic of Medicare. More specifically, in addition to that, we are talking about supplemental Medicare plans as well.
And today we have a guest that's going to help clear up some of that confusion. We are joined today by Jodie Klepetka. Jodie is a licensed independent Medicare specialist.
In my initial conversation with her, as we prepare for this episode, I found that she does a great job of simplifying many of the key issues that you need to know to make an informed decision, and that's very much what the Simply Retirement Podcast is all about.
So with that, Jodie Klepetka, welcome to the Simply Retirement Podcast.
Jodie Klepetka: Thank you so much, Eric. I'm happy to be here.
Eric Blake: Absolutely. Happy to have you here. So I think it's always good to start off with just some of the basics, just a little bit about your background, and ultimately, how you got into Medicare and Medicare supplements.
Jodie Klepetka: Originally, I started just in the medical field in pharmaceuticals. Then I went to work after that for a private carrier and just did supplements, advantage plans, and drug plans. But then I decided I really wanted to do more than just sell one product; I wanted to help more people. So after about doing that for 9 or 10 years I went out on my own. And now, instead of just selling one product, I have multiple carriers, multiple products, and more things to offer people.
Understanding Medicare Basics
Eric Blake: Perfect. That sounds great. Well so let's just dive in. Let's get it out there. What is the number one question that you get asked about Medicare?
Jodie Klepetka: Everybody wants to know. They'll say, "What's the best plan?" Well-
Eric Blake: Of course.
Jodie Klepetka: Of course, they want the best plan, but the thing is-
Eric Blake: They spit it out right off the top.
Jodie Klepetka: Right, just the one out of the hundred that there are, what's the best one? But that's just the point. We need to find out what the best plan is for you, not what your husband has or what your neighbor has, or what Joe down the road has. It's what fits you, and that is so important is it's got to be for you.
Eric Blake: You mean we shouldn't be listening to J.J on Good Times to give us guidance on-
Jodie Klepetka: Oh Lordy.
Eric Blake: We'll get into that in just a little bit. I don't want you to be thrown off the tracks already.
Jodie Klepetka: Yeah. I mean, some of the things that you need to think about when you're picking a plan, and some of these are rather obvious, and some aren't obviously your finances, right? Not only finances today but obviously what your finances are going to be in the future. That has to be a consideration. Your health. Are you healthy now? Do you have big surgeries? Plan in the future? Are you unhealthy now or know you're going to have big risks of being unhealthy? Another one that people don't think about is where you live. This is important when choosing a plan. Are you in a rural area? Are you in an urban area? This makes a difference. Things like do you want to travel? I mean, this is something people don't think about, but it matters because you need a plan. If you're going to be traveling or maybe spending half the year here, half the year up north, you need a plan that will go with you., You don't want to sign up for something and then you can't use it when you're out of state.
Personalized Plan Selection
Eric Blake: Well so can you... Again, we're just working through the basics initially, and then we'll get into some more of the nuts and bolts, but just a basic breakdown of Medicare. What is it? What are the different pieces or the parts? Make sure I use the right terminology there. And why would most people need a supplement?
Jodie Klepetka: You have what's called original Medicare. So you're turning 65, or you are leaving your work, and now you need to sign up for Medicare, okay? So you're going to go in and sign up for original Medicare. And no matter what type of plan you go with you must sign up first. You have to enroll in original Medicare. And what this includes is you just go to Social Security Administration ssa.gov and get on. It's honestly very easy, 10, 15 minutes at the most. You need to sign up for Part A. Some people maybe will have already signed up for that. That's the Part that covers your hospitalization field nursing things like that. For the majority of people out here, that is free. 99% of the people out there it doesn't cost anything for Part A. Then you must sign up for Part B as in boy. That's going to be your individual physician, your labs,, things like that. Now that does have a fee attached to it. For this current year the price of that is $174.70. Now, it could be higher based on income, but that's the starting price for Part B. And the last component of original Medicare is Part D as in dog. That's your prescription drug plan. Now that you're not going to sign up for on your social security site, you just need to enroll in some form of a drug plan. You have to have one. They will penalize you at a later date if you do not have some form of drug plan available to you. So that's original Medicare. Now, can you just be on original Medicare? Yeah. Yeah, you can. But the problem with that is original Medicare only covers 80% of the bill 80%. So if something big happens, you're on the hook for 20% forever. There's no out-of-pocket max. I mean, if you have a $100,000 hospital bill, which is not unheard of I mean you're on the hook for $20000.
Eric Blake: Wow.
Jodie Klepetka: So I mean, it's just not fiscally responsible, right? I mean, you need to find some way to offset that 20%. And you have two ways of offsetting the 20 of the 20%. The first way is exactly what you said a Medicare supplement. And for most people, and for this purpose, we'll talk about Medicare's Plan G. There are other plans when it comes to supplements, but the majority of the people will be enrolling in what's called Plan G.
Eric Blake: Okay.
Jodie Klepetka: This is important. There's only one enrollment period for a Medicare supplement that's an open enrollment. You only get one shot at this,So if you decide to choose something else later down the line, after six months after a year, you can try to get a supplement, but you now have to go through underwriting. and that's for the six months after you enroll in B. So if you decide to choose something else later down the line after six months after a year you can try to get a supplement but you now have to go through underwriting. And if you have any sort of preexisting conditions or are just old, quite frankly, they will turn you down. They do not after that six months have to accept you. So-
Eric Blake: Well, I think that's an interesting thing. And one of the things I hear a lot is... And a lot of it's most likely advertising because you hear all the commercials and everything else when we'll get closer to October. And by the way this episode's going to be released... We're going to try to release it a couple of months in early August, so that'll be a couple of months before that period. Just as people are really starting to think about that, hopefully, they'll be tuning into our episode. But because of all the advertisements and all the things that people hear about open enrollment, Medicare open enrollment realistically may or may not apply to your situation, especially if you're a new enrollee, right?
Jodie Klepetka: Right. So I mean it's just something when you first are a new enrollee you just need to be aware of. And I think a lot of people don't realize that you really only have that one shot at getting a supplement. And how the supplement works is you would stay on your original Medicare, and they pay the first 80%, and then they bill your carrier for the remaining 20%,. And this applies to everything right? The hospital bills, the labs, your primary care. As long as it is a Medicare-approved event request procedure then the supplement will pick up the remaining 20%. It just has to be a Medicare-approved. What would be something that's not Medicare-approved? The obvious one would be elective cosmetic surgery. If Medicare says no, the supplements are no. So, just so that you realize that that's how it works, the Medicare has to say yay, and then they'll pick up the 20%. With a Plan G, the only out-of-pocket you have for this year is a $240 deductible. That's it. There's no co-pays. There's no co-insurance. There's no out-of-pocket max because the supplement picks everything up other than that $240. So it's very easy to use. It has no networks. So, as long as a doctor accepts Medicare-
Eric Blake: Accepts Medicare.
Jodie Klepetka: ... is willing to bill the antics of Medicare. Obviously, the supplement can go with you for people that like to travel or are going to spend half the year in another state.
Eric Blake: Okay, yeah.
Jodie Klepetka: Supplement's fabulous for that because they go with you they go with you everywhere. So it works well for that. I also mentioned in the beginning things to consider your health. If you are not healthy at the time of enrollment supplements are a great way to go because you're only paying that $240. You can see whatever doctor you want. There's no networks. Again, they have to take Medicare, but there's none of this referral stuff. If you want to go to MD Anderson, you can go to MD Anderson. When I talk about people's health, I mean that it is something that you need to consider. When you're in ill health a supplement is a really excellent way to start. There's no what you call out-of-pocket max because that's the most you would pay in a year because there isn't one, right? The supplement picks it all up. You just have to pay that $240 deductible.
Supplemental Plan Benefits
Eric Blake: Well I think that's one of the other things that's important and we'll touch on this a little bit more in a minute but that's why it's so important to work with the right people as you're getting close to retirement because we talk about that a lot. Even in the financial advisor world, the decisions you're making as a 45-year-old are completely different than the decisions you're making as a 63 60 65-year-old, right? Unfortunately, you actually hit on that where you get a one-shot and one-and-done, especially if you have some health issues, especially where you just don't get many do-overs when you get to that age. So it's really important to do your homework, do your analysis, or, of course, work with a professional who does this on a regular basis, somebody like yourself. And that's again what we focus on is retirement income planning and those really critical decisions that come into play in that 60 to 65-year-old timeframe.
Jodie Klepetka: Well, and you bring up a valid point about the supplement. So it has a premium, right? It costs. So that's obviously the only downside to it because really as we talk about it it picks everything up. I mean, you have a major issue: you're paying $240. But obviously, it has a premium. You have to pay for it. So you have to pay for your Part B like we talked about that 174. And then the supplement in this case we're talking G has a premium. So for this year, the premiums if you're just 65 if you're just starting out the premiums are running between $118 and $130 a month. This depends on your gender, where you live, are you a smoker, what kind of discounts. And there are discounts that apply to these what kind of discounts you can get. So for this year it's right in there for the cost of it. There is talk about some changes and they might be going up a little bit more for next year. They do go up every year. So this is something if you get a supplement you need to plan for this. This is not a static price. It goes up every year and it's because you're getting older right? And they will go up every year. The average amount is probably about 3% when you're budgeting. That's like a given a given 3%. You need to budget that in. Can they increase it more than that? Absolutely, if they have some sort of massive overall things like that. It could be more than that. There's talk about some changes in Medicare. So for next year, I won't know until about September if the prices are going to go up next year more than that 3%, and it sounds like they might. But it's just something you need to budget for and know that they're going to go up every year.
Eric Blake: Which again should be part of your retirement income strategy.
Jodie Klepetka: Right.
Eric Blake: So as you're planning-
Jodie Klepetka: It should be part of your-
Eric Blake: Yeah.
Jodie Klepetka: Right. But you also have to remember I mean you're paying more for the premium yes. But let's remember, if something happens, you're paying $240. I mean a hospital visit cancer. I mean, something catastrophic happens. You're covered, and you can go where you want to go and see who you want to see. And especially if you're in a critical illness time,, you have enough thinking about worrying about that you want to be able to go where you want to go.
Eric Blake: Well let's talk a little bit about that because I definitely wanted to get to this at some point, and this may be a good place to make sure people understand what Medicare does not cover when it comes to more maybe an extended illness or "Hey unfortunately I've got to go to a nursing home or an assisted living" something along those lines where Medicare probably doesn't pay what people think it will if anything at all.
Jodie Klepetka: That's a great question because I get people calling me all the time. They think that when they move into an assisted living facility that Medicare is going to cover that for them. That is not the case. The only time Medicare would pick up your actual living costs is if you were on Medicaid. It's Medicaid. Assisted living long-term living facilities have Medicaid beds. And that is the only time it's like when you're on that combination of Medicaid and Medicare. But it's really not the Medicare that's picking it up. It's Medicaid that's picking it up. Of course if you moved into an assisted living it would still cover your doctor visits and your drugs. You can get a plan that works through the assisted living. If you need skilled nursing, if you're hospitalized, or maybe have knee surgery or hip surgery, it will cover that rehab facility. It covers the rehab itself. That kind of things it stays in place but it covers your medical expenses never your living expenses.
Medicare Supplements vs. Medicare Advantage Plans
Eric Blake: Well and just a quick shout out to Dena Mabry on episode 12 a long-term care specialist that we had on that was a great episode where she kind of talked through more of the long-term care strategies that you want to think about. Let's get into this conversation now, talking about how you went through the original Medicare Medicare supplements. Let's go ahead and get Medicare Advantage into the conversation. Tell me what you think about Medicare Advantage. In most cases, in itself, it's not bad. It's sometimes just how it's positioned, I think, where it gets a bad rap.
Jodie Klepetka: Right. People are very polar on this. They're either supplement people or their Advantage people. And the Advantage plans... So let me explain to everybody. How the Advantage plan works is instead of having this original Medicare and a supplement an Advantage plan takes that original Medicare the A the B and the drug plan and privatizes it. So instead of Medicare running it the carrier is running it a United Health a Blue Cross Blue Shield they're running your Medicare. So it's run just like your regular commercial health insurance. The majority of these plans have zero premium, or very little premium, and the Medicare money goes directly to the carrier to run the program. And there's a very little premium big bonus for everybody, right? But it's like regular insurance. There's coinsurance, there's copays, there's fees. And again you just need to be aware of what they are and how it works. All of these plans all Advantage plans have out-pocket maxes. So they give you a limit on what could possibly be the cost that you would be paying which is good to know. I mean, you need that. And they kind of run anywhere between $3,500 to about $7,000 for out-of-pocket max, depending on what type of plan you run you enroll in. So down the road, you always need to, if you enroll one in these plans, make sure sure you have that buffer if something catastrophic happened and you're going to hit that out-of-pocket max. Now these plans come in like an HMO version and a PPO version. So, some people don't realize that there are PPOs out there. I like a PPO better because it allows you to travel if you get an HMO plan. It does not work out of the state of Texas unless it's an emergency. So I mean you get the flu while you're visiting somebody you're on your own. You just have to pay for it out-of-pocket. If you had a PPO Advantage plan it would cover it. You just pay a higher amount because it's out of network at that time. But at least you have coverage. The PPO have higher co-pays and the higher out-of-pocket max because it is a PPO, right?
Eric Blake: Right.
Jodie Klepetka: They all have networks. So you need to make sure that every doctor that you see hospitals you want to go with are in the network. These plans work best in big urban areas like Dallas, right? Plenty of doctors that have signed up on these.
Eric Blake: Okay. That is good to know.
Jodie Klepetka: Yes, I mean, it's a big thing to consider.I mean, if you think you're going to retire and spend your retirement out in the country, these plans don't work as well out there. I mean if you think you're going to retire and spend your retirement out in the country these plans don't work as well out there. It's hard to find doctors. It's hard to find rehab facilities and skilled nursing facilities that will take the plans because you have to be in the network, and they don't have to take that plan. So if you're going to retire out in the country you really need to think about that. In a city like Dallas, there's lots of options, right? Plenty of doctors, plenty of hospitals. They do work best in an urban area. They have the extra benefits that you hear about all the time the dental and the gym membership and the hearing aids. I mean, and that's not something you get on a supplement. You don't get to have those extras. It's one of their big benefits. What they like to add is... And a lot of people love that. I mean, there's nothing wrong with that. They want their gym membership paid and that is one thing that you do get with an Advantage plan that you don't get with the supplement. And with the Advantage plan the drug plan is built in. So then you're covering that because it takes over it. Your drug plan is built in.
Eric Blake: Well two really insightful things that you shared. One was when we first had our conversation about recording the podcast episode, and I would love for you to share a little bit more about it, but that was when people were thinking about Medicare Advantage versus original Medicare with a supplement that either you're going to pay today or you're going to pay tomorrow. You're going to pay. You're not getting out of that. Just because you're paying less today doesn't mean that there's not something coming down the road for you. So, can you walk us through that a little bit as far as what you meant by that?
Jodie Klepetka: So how I like to think about it is when you have a supplement, I think about it as you're pre-paying the insurance, right? You're pre-paying. You're paying that premium, you're paying that premium, you're paying that premium. Then, when you get older and are maybe not as in good health, you start having some big health bills or really some large health bills, but now they are covered in full. I mean as long as again it's Medicare approves that they're covered in full other than that deductible. So you've been paying that premium to build up to they're covering everything for you because now your health isn't as good, whereas an Advantage plan is exactly the opposite. You're not paying a premium you're not paying a premium. You're in good health. You're pretty much not going to the doctor very often. You're just doing your regular stuff. You're not paying. You're not paying. Now you're older, and your health is maybe not as good now, you're bumping up against those out-of-pocket maxes because you're going to the hospital and things like that. And you just need to have that money put aside, right? So they're going to get your money. It's just whether or not they're going to get it ahead of time or at the end.
Eric Blake: Got it.
Jodie Klepetka: For someone like you, I mean, that's like a planning purpose, right, which way you're going to budget that. But if you go the Advantage way you just need to make sure that you have that cushion in case something does happen.
Eric Blake: Well then, one of the other interesting things that you brought up that I think is a really great point is when you are evaluating your options if you're going to work with an agent, one of the things that you indicated is be cautious if you're working with an agent that only sells Medicare Advantage. So you talk a little bit about that.
Jodie Klepetka: Right. Well, I mean, I'd be cautious of people that are both ways that only sell supplements or only sell Advantage plans. Honestly, it's because of what's working out best for them, right? So you want somebody that can offer what's best for you. When they only do one or the other I feel like they have their own agenda for some reason that there's a specific reason they're only pushing one or the other. And you also want to make sure you get somebody that has multiple carriers right? You never want to just call the carrier direct. They're only going to sell you what they have, right?
Eric Blake: Mm-hmm. Mm-hmm.
Jodie Klepetka: So you want somebody that has a good reputation and that sells both. I think that it's important that it not be somebody that's just pushing their own agenda that they want you to have an Advantage plan because it works better for them, not necessarily for you.
Navigating Enrollment Periods
Eric Blake: One other thing as I was just kind of thinking about, and that was a great response on that, but the other thing I was going to ask you because this is a question I get quite a bit is, "Well,, if I work with an agent if I work with somebody on this versus just doing it on my own do I pay more if I work with a Medicare specialist like yourself rather than doing it on my own?"
Jodie Klepetka: Well that's a good question. No I don't charge a fee. I'm paid by the carriers. I mean, we're all paid by the carriers. That's how that works. It's a set amount so it doesn't behoove me in any way to push one carrier over the other a United over a Blue Cross or whatever. It doesn't. I am paid exactly the same amount. So it behooves me to find the best plan for you. And the advantage of having someone like myself do it is I have access to them all. If you're going on a supplement and you just need your drug plan, I can put in all your drugs. And at this point, when it comes to a drug plan, you just need the cheapest one. And I can put them in and it will literally spit out what is the best plan for you for that year. And the same thing for Advantage plans. Again, you would need to look at your drugs. You need to put in all your doctors. I mean, this is just something, if you're doing it by yourself, you're not going to have access to. I mean, you would have to go to each carrier site and do it individually, and it would be very hard to do.
Eric Blake: Right. Well, and again, I get that question a lot in the financial advisor world. "Hey, are you a fiduciary? Do you have my best interest?" And unfortunately all the red tape makes it even harder for the consumer to understand a lot of this stuff. But when you can say, "I get paid the same regardless. It's more about the planning and the services that we're going to offer versus I get an incentive to sell this thing over that thing." And it's good to know that that's very similar to your world, where you just got to find the best thing for you.
Jodie Klepetka: Right. Right. Absolutely.
Eric Blake: Well, I mentioned earlier on in the episode that by the time this episode actually gets released, we're shooting for early August, which will be a couple of months before that Medicare open enrollment period. Would you mind just walking through some of the key dates that people need to be aware of? We talked a little bit about those initial enrollment periods once you turn 65 and once you retire, but just some of these... Because again, you hear them on the news you hear in advertisements, and everything else about the open enrollment period. What does that really mean, and what are the time periods that people need to be aware of?
Jodie Klepetka: Well, so open enrollment will open October 15th and go through December 7th. So this is the time when you can change your plans, right? If you have an Advantage plan, you can change them every year. You need to look at... These plans change. Carriers add things. You need to look at it, maybe not every year, but for sure, every couple of years. This will allow you to see what else is out there. Your drugs have maybe changed. If you're on a supplement plan, this is also the time to change your drug plan. Don't get stuck being on that same drug plan. I see this all the time with people that have been on it forever and it's built on some recurring thing and they're not realizing that they're $10 drug plan they're now paying $50 for because they haven't paid attention. So, during that open enrollment from October 15th to December 7th, those are the changes you can make. And quite frankly, you can make as many changes during that enrollment time as you want the last change stance.
Eric Blake: Excellent.
Jodie Klepetka: Then there's one more enrollment period that most people don't really know about and that is January 1st to March 31st. Now, this plan is for Advantage plan people only this enrollment, okay? It's a one-time option to change your Advantage plan or go back to the original Medicare. Basically, there is for somebody who missed open enrollment or maybe got a bad person who changed their plan they didn't want. It allows the consumer to correct maybe some sort of error that maybe happened with their Advantage plan. So if you or a relative somebody finds them up without their knowledge or something like that, you can use that enrollment period to change back to another plan.
Eric Blake: Good to know.
Jodie Klepetka: So it's a good option that most... You're not allowed to advertise and that's why you don't hear Jimmy and the gang talking about it.
Eric Blake: Yeah why would you want to advertise that something where you could actually fix a mistake? That's crazy.
Jodie Klepetka: Yeah. Yeah. Or you just decide you want to change you are allowed one shot if you're an Advantage person during that time.
Expert Advice on Plan Choices
Eric Blake: Well, this has been so insightful. Jodie how can people reach out to you if people have questions, they want to chat with you about their Medicare needs, their Medicare supplement needs, how can people reach you?
Jodie Klepetka: Oh, well, you can give me a call. Obviously, my number is 214-499-3495. Or you can drop me an email at JodieQHC@gmail.com. And it's Jodie, J-O-D-I-E-Q-H-C, Quality Healthcare Choices is what that stands for, @gmail.com.
Eric Blake: Perfect.
Jodie Klepetka: And I'd love to help them out.
Conclusion
Eric Blake: Excellent. And we'll definitely share that information in the episode summary as well. Jodie, thank you so much for joining us today. Please be sure to reach out to Jodie if you have questions about Medicare Medicare supplements or Medicare Advantage. Again, it's an area that can be really confusing and creates additional stress on retirees that maybe they don't necessarily need to have.
Jodie Klepetka: Right.
Eric Blake: But thank you so much also for listening today. Please like, follow, and share the show. If you'd like to learn more about our firm, you can visit our website at www.blakewealthmanagement.com. You can also listen to previous episodes, ask us a question, or suggest a topic for the show, and access a number of our other free retirement resources at www.thesimplyretirementpodcast.com. We're also on YouTube at The Simply Retirement Podcast and all the other major podcast platforms. And we will see you again on the next episode of the Simply Retirement Podcast. In the meantime, please remember that retirement is not the end of the road. It is the start of a new journey.
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